Flat-tax a gamble for Perry, Cain?

posted at 10:05 am on October 21, 2011 by Ed Morrissey

Rick Perry will roll out his new plan for tax reform that adopts the flat tax, a concept most associated with Steve Forbes’ presidential runs in the 1990s and still a favorite among fiscal conservatives. Not surprisingly, Forbes himself believes that this will shake up the presidential race and breathe new life into Perry’s campaign:

Steve Forbes, whose flat tax plan helped make him an unlikely contender for the Republican presidential nomination 15 years ago, is praising a new version of the idea from Rick Perry. And Forbes, who says he helped devise Perry’s plan, left little doubt that he’ll formally back the Texas governor before long.

Asked whether that included his own 1996 plan, Forbes said it did, because unlike him in 1996, when he fell short of upsetting front-runner Bob Dole, Perry “is going to win.”

The Washington Post isn’t so sure. They call the reliance on a flat tax by both Perry and Herman Cain “politically treacherous,” and that it tends to “flame out” presidential campaigns much like it did with Forbes, Phil Gramm, and even Democratic hopeful Jerry Brown:

The flat tax is appealing at first to voters for its simplicity, but the very thing that makes it popular also makes it politically treacherous.

The allure of the flat tax is that it promises to wipe clean the complicated tax code. But it does this by throwing out some popular tax deductions, including breaks for mortgage interest payments, charitable giving and employer-paid health care.

The details of each flat-tax proposal differ — the overall rate, whether some low-income families would be exempt and which deductions might be spared on the chopping block. But experts say they invariably increase taxes on lower-income households and cut them for the rich, a potentially dicey proposition for voters worried about the country’s decades-long trend of growing income inequality.

There’s a whole lot of mythmaking in this passage, not the least of which is the supposed “growing income inequality,” which economist James Pethokoukis unravels at The American. Also, Herman Cain’s reliance on a flat tax is transitional, not permanent, as his web site clearly states. It’s Phase I of a two-phase plan; the second phase is the Fair Tax, which would eliminate the income tax altogether, flat or not.

Lastly, this analysis assumes that Forbes, Gramm, and Brown were on a trajectory to victory that only got interrupted by their adoption of the Flat Tax. That’s simply absurd. Forbes had no prior electoral office experience, and was very much a long shot — very similar, in fact, to Herman Cain, except with a vast personal fortune behind him. Gramm, while a favorite of conservatives, was a House member [see update], and no House member has won a major party nomination for President in the primary era, stretching back to the turn of the last century. Brown had been governor but always considered a bit of a fringe character (at least until Californians in their supposed wisdom gave him a third term 28 years after his second term). None of these men won the nomination, but the Flat Tax had little to do with their losses. The best causation case that can be made is that it didn’t give them such a boost as to exceed expectations.

Can Perry get the kind of boost from the Flat Tax that eluded longer-shot candidates? Perhaps. At least Perry will finally have some specifics to offer on the campaign trail and in debates, rather than just platitudes and promises that his plans are in the oven and should be out soon. A flat tax (presumably in both personal and corporate tax codes) would boost the economy through simplifying the compliance process and establishing the kind of certainty that allows for long-term investment.

However, there’s a devil or two in these details as well. In fact, Matt Lewis points out that Cain specifically rejected the flat tax as a permanent reform because of all the exceptions that would have to be added to it. At what level of income should the tax start? The first dollar? Twenty-five thousand? Thirty-six thousand? Do we still include exemptions for children and the disabled? Until we actually see Perry’s plan — on which Forbes is apparently consulting — we can’t score whether it’s better than other proposals in the field.

But even that doesn’t address the real concern about Perry. Even if his plan is outstanding, can we trust Perry to defend it with enough eloquence in a general election? Perry did an awful job of expressing his successes in Texas in the first four debates, and his relatively successful performance this week almost entirely relied on attacking Mitt Romney. Imagine Perry having to explain in a debate with Barack Obama the complicated differences in tax burdens between the current and Flat Tax models for a family of four. If Perry can improve his performance to accomplish that effectively, then the Flat Tax will be a boost to his campaign. If not, then Perry would remain a weak candidate even if he had the best tax reform policy ever created.

Update: My good friend Michael Koolidge reminds me that Gramm was a US Senator by the time he ran for President. That’s just sloppy memory on my part, and I apologize. As I recall, Gramm wasn’t getting any traction in the race with or without the Flat Tax, though.

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I have been to folks houses out in the boonies, and their driveway is 5 miles long.

I just got this from a friend on face book it’s so funny So You Want to Live in Montana… this guy get’s a job in Montana he’s going to open the first Starbucks in Montana. His co worker gives him a long list of reasons why he shouldn’t move to Montana.

Dr Evil on October 21, 2011 at 8:25 PM

5 mile driveway. I drive 7 miles to the Mall & can’t imagine a driveway that long. They should have included that in that funny clip:-) It was funny. No electric,LOL.

Oh, I took that True Love test. Forget it, the answers to the questions don’t match for one thing. Another is the answers selected don’t match the Candidate!! I think the software has Viruses & Trojans:-)

I selected answers that I happen to know line up with Gov. Perry and the match was NOT Gov. Perry, LOL Not a good test when the testee knows more than the testor, LOL

I hope whoever wins selects John Bolton as Secretary of State. Maybe Perry would make a good ambassador to the UN. I think I would also like to select someone who is good at downsizing things to take over various government departments that I would shut down, one by one. Someone to oversee the elimination of the Department of Education before moving over to EPA. Who is good at that sort of thing these days? I think Ron Paul would be good for that position.

I think I understand Cain’s appeal at this point: he isn’t a politician. He is the only one running in this election that isn’t a politician. Romney doesn’t have some business experience but is too far removed from main street. He seems more comfortable at the country club with Biff and Buffy eating cucumber sandwiches.

. . . .I am single and do not plan on ever marrying. It isn’t worth it. . . .

Voter from WA State on October 21, 2011 at 5:03 PM

I haven’t gotten a chance to read this till now and it’s too late to reply to the tax analysis. Too tired.

But I had to reply to this one sentence. Maybe it’s the mother in me, but, sweetie, don’t say that. Never say never. I’m going to pray that God sends you someone special one day. You’re job is to not dismiss the idea so when it happens you won’t pass it by. A good marriage, even a not great marriage, can bring you much happiness, especially children. It is worth it. Maybe not now, but maybe one day.

Yeah, I know, it’s your life and I am meddling. But I’m doing it anyway. lol

My best friend had posted that clip, she lives up on Flathead Lake, there was one response from someone’s Grandpa having chucked rocks at Beavers GRIN. My Mom told me she had been trapped in the outhouse by a bear when she was a young girl, my folks moved out of the sticks, and into town before she was a teenager. They spoiled themselves with some indoor plumbing – ah the joys of refinement :)

I think I heard O’Reilly saying he was having Rick Perry on the Monday show. I know he’s been trying to get him to come on the Factor. This would be a good opportunity for the Perry team to roll out something more interesting than “tax plans”.

Yeah, I’d say there is some kind of glitch.

I recognized many of the quotes and the politician that said them.

I’m pretty sure that I didn’t match any four of the quotes to any candidate.

cozmo on October 21, 2011 at 8:37 PM

That’s good to know, I thought maybe my Catholic radar was going off or something….it’s odd Catholics can be in a crowded room of people, and somehow they gravitate, and end up talking to each other. It’s a powerful thing having the Holy Roman Church imprint on you. I have joked, I think they low jacked us all at baptism.
As badly as the progressive left wants to live in the era of FDR – the 1930s depression era, Santorum wants to go back to the 1950s. I want a candidate that is forward looking, this is the year 2011, we need someone with fresh ideas not old moldy outdated ideas. Santorum is a social values candidate. I am an Independent, I am concerned with our country’s “Fiscal” issues, I lean Libertarian. I overlap with social value voters in one area, I am pro life.

Ideas he developed and asked advisers to help him fine tune it. Perry simply called up Forbes and asked him what he should do.

csdeven on October 21, 2011 at 11:46 PM

It is Mittens strategy to destroy Perry before the primaries. After South Carolina Mittens will start running ads with Cain’s gaffes. The only way Romney wins is if conservatives don’t settle on a single candidate. And that candidate had better have a lot of money and a good organization. The only conservative with the money and organization to threaten Romney right now is Perry.

The only way Romney wins is if conservatives don’t settle on a single candidate. And that candidate had better have a lot of money and a good organization. The only conservative with the money and organization to threaten Romney right now is Perry.

All of you Cain supporters better start sending him checks.

Bill C on October 22, 2011 at 12:19 PM

A split conservative vote works best for Romney for sure. Look at the Cain threads…..you have Perry supporters and Cain supporters vilifying the candidates and each other….meanwhile, Romney is #2 in Iowa. I happen to believe that Romney is most electable and other than my concerns about Romneycare, I think he is best suited to get the country back to work. And that is the point, the economy is the main issue. We have these ideological voters who are focused on abortions and which candidate is more in line with the pro-life agenda. The fact is that all the GOP candidates will support pro-life legislation.

But it is typical of ideologues irrespective of their issue…..they would rather gleefully watch the country go up in flames under Obama rather than give one single inch on their issue.